Among the very reliable and strong candlestick indicators is the bearish three-session side-by-side. These come in both black and white varieties. Normally, chartists expect to see black sessions for bearish movement and white session for bullish movement. This kind can include both varieties.
The black side-by-side bearish formation has three sessions with the following attributes:
1. The first day is black, following by a downside gap.
2. The second day is also black, continuing the downward movement. In other words, the gap between days one and two is not filled, and the combined two-day downward movement is clearly bearish in character.
3. The third day is similar or identical to the third day, opening and closing at the same levels. This is an interesting formation because it also is a gapping day. The distance between the low close of day two and the higher open of day three is a gap that does not reverse the bearish trend.
The three-session black-dominated side-by-side is easy to spot. But what about its cousin, the white bearish side-by-side formation? This one varies from the all-black variety. It contains the following attributes:
1. The first session is black and is followed by a downside gap, exactly as it the black side-by-side bearish formation
2. The second day extends the gap further by opening even lower than the visible gap and closing up but without filling the gap created between days one and two.
3. The third day is also white but opens and closes at or close to the positions of day two. Like the black variety, this creates an invisible gap. The high close of day two gaps downward to the lower open of day three. However, note that the closing prices of the second and third days never move to fill the original gap.
The white version is more complex than the black and can also be misleading. It would be easy to see the two white sessions and believe that this points to a coming bullish reversal. To avoid this mistake, be aware of the important gapping action. Not only is the original gap between sessions not filled; the gap between sessions two and three is also downward but invisible. The inability of the bulls to move price into the original gap reveals that the bulls have no momentum. This weakness foreshadows further price decline in coming sessions.
These two side-by-side patterns are difficult to interpret because they appear to be so different. Even so, they both reveal the same thing: Consecutive gaps, both visible and invisible, and a lack of bullish momentum that points strongly to likely further price weakness.
Even though the bearish side-by-side is not always easy to find, when it does appear it is a strong indicator of bearish sentiment. Adding to the complexity, this may appear in many forms, as a continuation pattern in an existing downtrend, as a reversal after an existing uptrend, or as the conclusion of a sideways-moving period of indecision.
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